Coronavirus: 10 FAQ's on NRB Relief Package for COVID-19 affected businesses

1.     What is the Moratorium Scheme?

Nepal Rastra Bank (NRB) has issued COVID-19 – Regulatory Package notification, dated Chaitra 16^th 2076. In accordance with the notification, BFI’s shall offer amoratorium of up to three months in respect of all term loans (including credit card)
on payment of installments (principal and interest) falling due between Chaitra 01, 2076 and Chaitra 31, 2076. The customer of the Banks in accordance with this scheme can defer the repayment of such loans by up to three months. However, interest shall continue to accrue on the outstanding amount of the term loans during the moratorium period.

    2.     Which type of loans are eligible for Moratorium Scheme?

Moratorium will be offered in respect of all term loans including Credit Card dues. For eg. Home Loan, Hire Purchase Loan, Business Term Loan, Agriculture Term Loan etc.

    3.     Which Installment does the Moratorium Cover?

The moratorium covers all unpaid monthly/quarterly installment (principal and interest) due during the month of  Chaitra, 2076 including credit card payment.

4.   Whether moratorium scheme will be applicable for interest on working capital loan or overdraft loan?

It is not clear from the notification, whether moratorium scheme will be applicable for monthly/quarterly interest falling due on working capital loan or overdraft loan between Chaitra 01, 2076 and Chaitra 31, 2076. There is still some confusion which needs to be clarified by NRB.

5.     Whether the Bank charges no any interest during the moratorium period?

In line with NRB guidelines, the Bank will continue to charge or accrue interest during the period of moratorium. This interest accrued during the moratorium period (Baisakh, 2076 to Ashadh, 2076) shall be paid in accordance with their respective due date whereas the due interest deferred for the month of Chaitra, 2076, needs to be paid by the customer to the Bank at the end of the moratorium period (i.e. Ashad end 2077).

6.     Is there any rebate/benefit where the borrower wants to pay the installment of Chaitra, 2076 in time?

To encourage the timely repayment of loan, NRB had notified BFI’s to provide rebate amounting to 10% of interest due amount. Rebate is applicable only to the installment falling due and paid during the month of Chaitra, 2076. Rebate will not be allowable in the portion of principal amount included in the installment.

  

7.     Whether the benefit is available where your loan is overdue because the installment for earlier month/quarter is unpaid?

The moratorium benefit for the installment as per NRB guidelines is only eligible for dues falling between Chaitra 01, 2076 to Chaitra 31, 2076, and not for overdues outstanding as on Chaitra 01, 2076. All overdues prior to Chaitra 01, 2076 shall continue to attract the directives issued by NRB as applicable, without any moratorium dispensation.

8.     Whether the loan tenure be extended on application of the moratorium scheme?

The installment which falls due in the month if Chaitra, 2076 is required to be paid at the end of moratorium period (i.e. Ashad end 2077) which reflects that the loan tenure will not be extended.

9.     Whether the borrower will be charged with penal charges or penal interest for availing the moratorium benefit?

No, the Bank shall not charge any penal charges or penal interest for availing the moratorium benefit. The Bank only will accrue the interest as per the loan contract rate during this period. However, in case the borrower does not pay such accrued interest as and when the same becomes due, then penal charges or

penal interest would be applicable.

10.  What about short term working capital loan falling due for repayment in the month of Chaitra, 2076?

Concerned BFI’s can extend the time-period for repayment of those short term working capital loan falling due during the month of Chaitra, 2076. The extension can be made for 60 days from the date when it falls due for repayment.